Granny annex/flat in daughter's home?

Here is a suggestion, and I know someone who has done it. Both sell your homes, and aim to buy houses in the same road. A ninety-five year old friend sold her bungalow to move nearer her daughter; she and her family sold their house, and by great good luck they were able two separate houses next door to each other; her adult grandchildren are on hand for jobs and frequently stay overnight. Seems to be working very well, and there would be no problem if nursing home fees were a necessity.

Sounds sensible in theory, and may well prove to be just that, but I’ve heard of such arrangements eventually becoming untenable because of dementia. Among other other factors the person can no longer understand that they should stay in their own home much of the time, not to mention losing all sense of time, and endlessly knocking or ringing the doorbell at all times of the day and night.

The other thing to be aware of is the possibility of care home fees being needed later. If there would still be enough money to pay for them, no problem, but if not, and the local authority would have to pay, there could be a question of deprivation of assets.
LAs are understandably very hot on this - i.e your money has been used to provide a valuable addition to an adult child’s home. They won’t care that this was not the original purpose of the exercise. They can and do require the money to be repaid.

Plus, the addition/annexe cannot then be sold separately to fund care. It may of course be rented out, but any such income would be unlikely to cover more than a small part of care home fees.

Sorry to point out negatives, but they are things to bear in mind.

As you daughter is an only child and you get on well it is a very sensible idea. A Granny annexe does not provide a separate “dwelling” it remains part of the original house so cannot be sold separately.
Assuming your daughter is to inherit the bulk of your estate and you contribute to the annexe you can gift the cost of it when you sell your house, that gift or part of it may be liable for inheritance tax, subject to the 7 yr rule and your inheritance tax threshold.

This is a very good idea, you are only 20 mins away but that becomes a problem if you need help 3 times a day

Thanks to all who contributed to my post. There's a lot to think about & although my accommodation would be entirely separate the plan is to have my daughter on hand as I become less capable. I'm in two minds about it so will need to be convinced after having taken professional advice, that it's right for us all. Thank you for your contributions.

I have no personal experience, but a friend lived in this situation; she was the daughter and when she married in her early fifties her widowed mother made it quite clear she expected to live with them. So they bought a large house with a perfect annexe, just as you describe, except that mother refused to live in it, selected the bedroom next to theirs and ignored her private sitting room in favour of spending every evening with them. Eventually my friend's in-laws also moved in, into the annexe, and all lived to a ripe old age, apart from her husband.
I would stay where you are and maintain your independence.

We shared a house with my parents, separate kitchens etc.

I vaguely remember that the arrangement can be classed as separate households for things like council tax. The way round that is if you share meals (that might be one meal a day).

Worth checking before you commit to it.

This was a suggestion made by my daughter and partner as well Nonogran I turned it down because I was still fairly fit and healthy. A few years later they split up unexpectedly.
I would have reservations now even though I am older and not as well, I prefer my independence. I agree with NotTooOld and Calendargirl makes some good points.
Sorry to rain on your parade but for me there are too many cons and not enough pros.

My mother did this with my brother and SIL. She sold her flat in 1999 and paid £50K, half of the cost for the £100K three storey house they bought on the IOW. She had the ground floor back room with an ensuite as her bedroom, the front lounge, and shared the kitchen with them. My brother and SIL and family had both of the upstairs floors.

I wasn't happy to hear she was expected to pay 50% of the bills - plus the recarpeting of the whole house, then window repairs etc. It is important to discuss and decide on your contribution to the household bills etc.

Might be a good idea to talk about finances.
Will they expect you to use all of your money from your sale to go into the ‘Pot’ or will you be left with a healthy Bank Balance?
I think you might need legal advice as there can be many pitfalls some as pointed out by Calendargirl

Are they likely to have children? Could this be wonderful....or actually quite a daunting thought when you talk about living with them. We are thinking along the same sort of lines with one of our daughters, fiancé, and two ( small at the moment), grandchildren. Our house is big...but we do like space, and when we’re all together, four children, spouses, grandchildren, it feels small!
We’re 60 at the moment, so thinking maybe another 10 years ?. As someone else said, you are only 20 minutes away. Wait until you’re sure, would be my advice.

No personal experience, am sure others will come on who have.

Just things such as what would happen if your daughter and son in law split up, unlikely maybe but you never know.

What about as you age and need more care, will they look after you or not?

Will the property be in all your names, or just theirs?

What if God forbid, you outlive your daughter and SIL remarried?

Lots to think about, but I can see the appeal of all being under one roof but separate.

Good luck.

Is it really necessary, Nonogran, when you are only 20 minutes away? Personally, I think I would rather maintain my independence. On the other hand if it is a sort of Escape to the Chateau situation it might be rather fun.
Sorry, I'm no help. Someone else will be along in a minute. Good luck with whatever you decide.